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Sep 30 2017

National Consumer Bankruptcy Rights Center #fraudulent #bankruptcy


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Posted by NCBRC – August 18th, 2017

“[N]otwithstanding a debtor’s potential eligibility for an extended term student loan repayment program, if a debtor chose not to enter such a program in good faith, the repayment period under the second Brunner prong is the remaining contractual term of the debtor’s loan.” Price v. Devos (In re Price). No. 15-17645, Adv. Proc. No. 16-11 (Bankr. E.D. Pa. June 23, 2017).

The debtor, Kristin M. Price, was a twenty-nine-year old, soon-to-be-divorced, mother of three young children. She was educated and trained to work in vascular sonography and was employed part-time in that field. She filed for chapter 7 bankruptcy in October, 2015. At that time, she had an outstanding student loan from the Department of Education which she sought to discharge under section 523(a)(8). Read More

Posted by NCBRC – August 16th, 2017

A creditor may abandon acceleration of a Note either by explicit agreement or by actions consistent with abandonment. In re Williams. No. 16-33276 (Bankr. S.D. Tex. Aug. 3, 2017).

Chapter 13 debtor, Durwyn Williams, defaulted on his home equity loan from U.S. Bank Trust which was serviced by Caliber Home Loans. On June 28, 2010, Caliber accelerated the balance due on the Note, and commenced foreclosure proceedings against the property securing the Note. In August, 2014, with foreclosure proceedings still ongoing, Caliber sent Mr. Williams a notice reiterating that his property was in foreclosure and that there was an outstanding balance of approximately $250,000.00. When Mr. Williams filed chapter 13 bankruptcy in June, 2016, Caliber filed a proof of claim for over $500,000.00. Mr. Williams objected to the proof of claim as precluded by the four-year statute of limitations triggered when Caliber invoked the Note’s acceleration clause. Read More

Posted by NCBRC – August 10th, 2017

Where the chapter 13 debtor failed to redeem property sold in a tax sale within the time period laid out in section 108(b)(2), the tax purchaser had an ownership interest in the property rather than a lien and was, therefore, entitled to relief from stay to take possession. In re Millington. No. 17-31290 (Bankr. S.D. Tex. Aug. 8, 2017).

Derron Millington filed for chapter 13 bankruptcy three days before expiration of the Texas deadline for redeeming property sold through tax foreclosure. When he failed to redeem after filing his petition, Gulf States, the tax purchaser, moved for relief from stay. Read More

Posted by NCBRC – August 7th, 2017

Where the debtor has a right to due process prior to the fixing of a debt, the lien acquired by the clerk of court’s filing the certificate of the debt is a judicial lien subject to avoidance in bankruptcy. Arkansas Dept. of Workforce Serv. v. Leaks. No. 16-8036 (E.D. Ark. June 14, 2017).

Tilda Marie Chambers Leaks received two overpayments of unemployment benefits. The Arkansas Department of Workforce Service (ADWS) concluded that the overpayments were due to fraud. It filed with the county clerk’s office Certificates of Overpayments of Unemployment Benefits and certified that all appeal rights had been exhausted. When the clerk filed the certificates of debt, liens against Ms. Leaks’ property were automatically created. In her chapter 13 bankruptcy, Ms. Leaks sought to avoid both liens as judicial liens impairing an exemption under section 522(f). The bankruptcy court granted the motion. Read More

Posted by NCBRC – July 28th, 2017

Where the debtor did not discover the injury giving rise to a medical product liability class action suit until after her bankruptcy was closed, the settlement proceeds from that cause of action were not property of the estate even though the debtor underwent the medical procedure while the bankruptcy was still pending. In re Purcell. No. 08-40224 (Bankr. D. Kan. July 19, 2017). Read More

Posted by NCBRC – July 24th, 2017

Section 522(f)(2)(C) does not create an exception to lien avoidance for mortgage deficiency judgment liens. In re Pace. No.16-8036 (B.A.P. 6th Cir. June 20, 2017).

Antoinette Pace filed a chapter 13 petition in which she scheduled her residence with a value of $147,630 and claimed a homestead exemption in the amount of $132,900. At that time, Farmers National Bank (FNB) held two judicial liens resulting from post-foreclosure deficiency judgments (though the two liens appeared duplicative, the bankruptcy court and the BAP treated them as separate liens). There were also two liens on the house held by Midland Credit Management (MCM) and Matthew Giannini, as well as a county lien against the property for unpaid real estate taxes. Ms. Pace converted to chapter 7 and moved to avoid the non-tax liens as impairing her homestead exemption. The motion was unopposed. The bankruptcy court granted the motion to avoid the MCM and Giannini liens, but denied the motion to avoid the liens held by FNB. Read More

Posted by NCBRC – July 21st, 2017

Where the debtor’s plan provided for repayment of child support arrearage inside the plan, the Florida Department of Revenue was precluded from post-confirmation garnishing of the debtor’s wages in connection with that debt. Dempsey v. Fla Dept. of Rev.. No. 16-328 (E.D. Tenn. June 20, 2017).

Kenneth Dempsey’s confirmed chapter 13 plan provided, “Miami Dade Child Support – Arrearage Child Support to be paid in full inside the plan.” Notwithstanding its knowledge of Mr. Dempsey’s bankruptcy and his treatment of the arrearage in his plan, the Florida Department of Revenue began garnishing Mr. Dempsey’s wages. Mr. Dempsey filed a motion for contempt. The bankruptcy court ordered the FDOR to cease its garnishments, refund any amounts it had collected but not yet disbursed, and reduce its claim in the bankruptcy by the amount it had garnished and disbursed. It declined to find the FDOR in contempt, however. The parties filed cross-appeals. Read More

Posted by NCBRC – July 19th, 2017

The automatic stay does not prevent the government from collecting criminal restitution under the Mandatory Victim’s Restitution Act, 18 U.S.C. § 3613(a). Partida v. U.S. Dept. of Justice. No.15-60045 (9th Cir. July 7, 2017).

Deborah Partida was convicted of embezzlement and theft of labor union funds. She filed for chapter 13 bankruptcy owing over $200,000 in court-ordered restitution for the crime. When the government offset the debt against her current income, she moved to hold it in contempt for stay violation. The bankruptcy court denied the motion and the Bankruptcy Appellate Panel affirmed. Partida v. United States (In re Partida ), 531 B.R. 811 (B.A.P. 9th Cir. 2015). Read More

Posted by NCBRC – July 17th, 2017

The debtors were “parties in interest” for purposes of establishing standing to compel abandonment of their residential property. Jahn v. Burke (In re Burke). No. 16-6603 (6th Cir. July 14, 2017).

After Philip and Nekolia Burke filed chapter 7 bankruptcy, the trustee sought to evict them from their residence and sell the property for the benefit of creditors. The trustee tendered a check to the Burkes representing their homestead exemption. The Burkes refused the money and moved to compel the trustee to abandon the property as being of inconsequential value to the bankruptcy estate. In the alternative, the Burkes moved to convert to chapter 13. At the evidentiary hearing, the parties offered competing valuations with the Burkes presenting testimony of two appraisers that the residence had a value of approximately $108,000 and was security for a mortgage in the amount of $91,581. The trustee countered with the testimony of a realtor, a home inspector and himself that the value was approximately $200.000. The bankruptcy court resolved the valuation issue in favor of the Burkes and granted the motion to compel abandonment. The district court affirmed. Read More

Posted by NCBRC – July 12th, 2017

The one-year deadline for seeking revocation of a discharge order is not jurisdictional and may therefore be waived. Weil v. Elliott (In re Elliott), No. 16-55359 (9th Cir. June 14, 2017).

When Edward Elliott filed his chapter 7 bankruptcy petition he failed to mention one important asset: his home. He received a discharge under section 727(a). Fifteen months later, when the trustee discovered the fraudulent nondisclosure, she filed an adversary complaint seeking an order vacating the discharge under section 727(d)(1). Section 727(e)(1) permits a trustee to seek revocation of discharge within one year of the discharge order. Mr. Elliott did not raise the issue of untimeliness in his response to the adversary complaint. The bankruptcy court revoked his discharge. The Bankruptcy Appellate Panel, however, found the one-year filing deadline to be jurisdictional and reversed. Elliott v. Weil (In re Elliott). 529 B.R. 747, 755 (B.A.P. 9th Cir. 2015). On remand, the bankruptcy court dismissed the adversary complaint for lack of jurisdiction. The trustee was permitted direct appeal to the Ninth Circuit. Read More

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